Market Update & Important Indicators
Reporting season did little to excite the US markets with both the Dow Jones and S&P 500 remaining relatively flat overnight. However, month to date stocks have risen, advancing back toward all-time highs. The Dow and S&P have both gained 2% so far in April and are approaching records last seen in early March.A recovery in resources stocks helped Australia's equities market notch its first gain this week, although the advance was pared with the release of stronger-than-anticipated jobs data. The S&P/ASX 200 ended the day up 0.7% at 5947.5, recovering some of its losses over the previous three days.
Europe showed more concern over the fate of Greece yesterday with the STOXX 600 falling 0.8%. These worries stretched across the channel as the FTSE 100 also fell, down 0.5% to 7060.5.
The Shanghai Composite Index had its biggest one-day percentage gain since late January on Thursday, rising 2.7%, while Hong Kong's rally cooled. Shanghai closed at 4194.82, as local investors bet that large Chinese companies had further gains in store compared with small caps, which have climbed more this year.
Metals on the LME were up with the exception of tin which fell 5.5%. Copper rose 1.8% to US$2.75/lb and nickel gained 1.3% to US$5.81/lb. Gold is trading at US$1,198/oz and Brent climbed 1% overnight to US$49.78/bbl.
In This Issue
Fortescue Metals (FMG) | HOLD
Fortescue Metals (FMG) released March Q results with 39.4Mwmt attributable shipped iron ore, down 1.2% Q-on-Q vs Argonaut forecast of 42.0Mwmt. Cash costs continued to decline, reaching US$25.90/wmt, down 9% Q-on-Q. At March 31 the Company had US$1.8b cash and US$9.2m debt. FMG’s average realised price for the Q was US$48/dmt vs the 62% Platts average of US$62/dmt.
Northern Star (NST) | HOLD
The recent acquisitions of the Barrick / Newmont assets have provided Northern Star (NST) with a platform for further growth. The stock’s recent inclusion in Van Eck’s GDX index has further lifted the Company’s appeal to a wider investment community. NST’s existing production profile already compares competitively against peers in the GDX index (see Page 3, Figure 1). Opportunities exist for the Company to continue organic growth via exploration, whilst being well positioned to undertake further M&A. Given strong cash flow, solid balance sheet and modest asset pricings, the Company could contemplate additional acquisitions, which could further enhance its broader metrics, as the Company will now be compared against a North America dominated peer group in the GDX. The recently announced Tanami (TAM) JV is complementary to this strategy. Longer term, NST could also consider rationalising its higher cost projects. Argonaut is anticipating ~142koz @ AISC A$1,121/oz for the March Q.
Recent Contacts & Presentations
Saracen (SAR), Beadell (BDR), Fertoz (FTZ), Atrum (ATU), Doray (DRM), Austal (ASB), TFS Corporation (TFC), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), Migme (MIG), Vmoto (VMT), Pioneer Credit (PNC), Minemakers (MAK), MZI Resources (MZI)